The national wine industry body says the year's grape vintage appears to be smaller than anticipated and prices have dropped for the second year in a row.

New Zealand Winegrowers' president Stuart Smith says the vintage is still being assessed.

But he’s predicting a small harvest of about 265,000 tonnes.

Mr. Smith says while that's good news in an over-supplied world market, it is tough on grape growers already being squeezed on price. He says falling returns have also meant that vineyards on the real estate market are not selling, and asking prices have dropped significantly.